Q1. Ready Tires features more than a dozen brand of tires in many sizes. Two of the brands are RoadPlus and RoadPower. Information about the two brands follows:
RoadPlus RoadPower
Selling Price
Tire, installed $180 $170
Cost per tire 120 80
As shown, selling prices include installation costs. Each tire costs $20 to install.
1. Compute each brand's net unit selling price after installation
2. Was cost the main consideration in setting those prices?
3. What other factors could have influenced those prices?
Q2. "A satisfied customer is the most important goal of this company!" was the opening remark of the corporate president, Alicia Les, at Wonder Tube Company's monthly executive committee meeting. The company manufactures tube products for customers in 16 western states. It has four divisions, each producing a different type of tubing material. Les, a proponent of total quality management, was reacting to the latest measures of quality from the four divisions. The data for the four divisions follow:
Brass Division Plastics Division Aluminum Division Cooper Division Company Averages
Vendor on time delivery 96.30% 90.50% 97.20% 87.10% 92.61%
Production quality rates (defective parts per million) 1300 2600 1200 4300 2400
On time shipments 87.10% 76.30% 89.70% 73.50% 81.65%
Returned orders 1.00% 4.00% 0.75% 6.00% 3.00%
Number of customer complaints 20 52 6 58 34
Number of warranty claims 6 11 3 13 9
Why was Les upset?
Which division or divisions do not appear to have satisfied customers?
What criteria did you use to make your decision?